Seven trade unions are challenging the Government in the Court of Appeal on Monday 20th February over changes to the way pensions are uprated, leaving public and private sector pensioners worse off. The appeal is against a High Court ruling last year which said the Governments’ switch from the Retail Price Index (RPI) to the usually-lower Consumer Price Index (CPI) for increasing pensions was lawful.

A judicial review by the unions challenged the switch to CPI, which was announced in the June 2010 budget, without any consultation or negotiation. Chancellor George Osborne claimed CPI was the more appropriate measure. But the unions have always said it was a deficit reduction measure and therefore unlawful under social security legislation which does not allow for national economic considerations to be used when deciding which is the best practicable estimate of the increase in prices.

While all three High Court judges agreed with the unions that deficit reduction was the motivation for the switch, two of them said the Secretary of State for Work and Pensions was within his rights to take into account public finances.

The move is expected to cut the value of pension benefits by 15% over time.

Matt Wrack, FBU General Secretary said: “Public sector employees are being forced to bear the burden of the financial crisis brought on by the actions of the banks. The Chancellor was motivated by deficit reduction measures sparked by that crisis when he made the switch.

“We will not allow this unfair and, in our view, unlawful breach of the contracts of millions of workers to rest. This case applies to private sector pensioners who are also losing out because of a switch in the way price rises are measured and applied to their pensions.”